2017

Bailing on the Car That Was Not Bailed Out: Bounding Consumer Reactions to Financial Distress

Reprint No. 2017:32

Author(s): Christian Huse and Nikita KoptyugYear: 2017 Title: Journal of Economics & Management Strategy Volume (No.): 26 (2) Pages: 337–374
Online article (restrictions may apply)
Preliminary version


We examine how consumers react to the financial distress of durable goods manufacturers by studying the Swedish new car market. We employ a difference-in-differences matching methodology whereby we compare sales of carmaker Saab with those of a control group of substitute products. To account for possible substitution between products in the treatment and control groups, we propose and apply bounds to our difference-in-differences matching estimator. We then refine the bounds and provide conditions under which they depend only on product elasticities. We find that there was a significant decrease in the sales of Saab following its filing for administration.


Reference:
Huse, Christian and Nikita Koptyug (2017), "Bailing on the Car That Was Not Bailed Out: Bounding Consumer Reactions to Financial Distress". Journal of Economics & Management Strategy 26(2), 337–374.

Nikita Koptyug

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